Equity Transactions

During the three months ended March 31, 2018,
the Company issued 500,000 shares of restricted common stock to the father of an executive officer of the Company for cash of $50,000.

During the three months ended March 31, 2018,
the Company issued an aggregate of 4,200,000 shares of restricted common stock to third parties for cash of $555,000.

During the three months ended March 31, 2018,
the Company issued an aggregate of 1,250,000 shares of restricted common stock to employees with a total fair value of $625,000
for services rendered. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed
the entire $625,000 upon issuance. The shares issued were valued at the date earned under the respective agreement based upon closing
market price of the Company’s common stock.

During the three months ended March 31, 2018,
the Company issued an aggregate of 4,441,942 shares of restricted common stock to consultants with a total fair value of $1,712,000.
The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $1,712,000
upon issuance. The shares issued were valued at the date earned under the respective agreements based upon closing market price
of the Company’s common stock.

During the three months ended June 30, 2018,
the Company issued an aggregate of 2,000,000 shares of restricted common stock to third parties for cash of $300,000.

During the three months ended June 30, 2018,
the Company issued an aggregate of 1,145,840 shares of restricted common stock to consultants with a total fair value of $401,000.
The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed the entire $401,000 upon
issuance. The shares issued were valued at the date earned under the respective agreements based upon closing market price of the
Company’s common stock.

During the three months ended June 30, 2018,
the Company cancelled an aggregate of 625,000 shares of restricted common stock on termination of a third-party service agreement
with a total fair value on the date of termination of $207,000. The Company recorded a gain on cancellation of $113,000 for the
portion of shares (375,000) issued during 2017 and reversed expenses of $94,000 for the portion of shares (250,000) issued during
2018. The shares issued were valued at the termination date of the agreement based upon closing market price of the Company’s
common stock.

Six Months Ended June 30, 2019

During the three months ended March 31, 2019,
the Company issued an aggregate of 1,250,000 shares of restricted common stock to employees with a total fair value of $131,000
for services rendered. The shares issued are non-refundable and deemed earned upon issuance. As a result, the Company expensed
the entire $131,000 upon issuance. The shares issued were valued at the date earned under the respective agreement based upon closing
market price of the Company’s common stock.

During the three months ended June 30, 2019,
the Company issued an aggregate of 500,000 shares of common stock in conversion of notes payable with a total fair value of $50,000.
As a result, the Company reduced the balance due on the notes by $50,000 upon issuance.

Options:

The following table summarizes common stock
options activity:

Weighted

Average

Exercise

Options

Price

December 31, 2018

12,449,900

$

1.64

Granted

—

—

Exercised

—

—

Forfeited

—

—

Outstanding, June 30, 2019

12,449,900

$

1.64

Exercisable, June 30, 2019

12,449,900

$

1.64

The weighted average exercise prices, remaining
lives for options granted, and exercisable as of June 30, 2019 were as follows:

Outstanding Options

Exercisable Options

Options

Weighted

Weighted

Exercise Price

Life

Average Exercise

Average Exercise

Per Share

Shares

(Years)

Price

Shares

Price

$0.50

8,000,000

1.17

$0.50

8,000,000

$0.50

$1.00

1,449,900

0.32 – 2.61

$1.00

1,449,900

$1.00

$5.00

3,000,000

0.50

$5.00

3,000,000

$5.00

12,449,900

$1.64

12,449,900

$1.64

At June 30, 2019, the Company’s closing
stock price was $0.09 per share. As all outstanding options had an exercise price greater than $0.09 per share, there was no intrinsic
value of the options outstanding at June 30, 2019.

Warrants:

The following table summarizes common stock
warrants activity:

Weighted

Average

Exercise

Warrants

Price

Outstanding, December 31, 2018

9,000,000

$

0.46

Granted

—

—

Exercised

—

—

Forfeited

—

—

Outstanding, June 30, 2019

9,000,000

$

0.46

Exercisable, June 30, 2019

9,000,000

$

0.46

The weighted average exercise prices, remaining
lives for warrants granted, and exercisable as of June 30, 2019, were as follows:

Outstanding and Exercisable Warrants

Warrants

Exercise Price

Life

Per Share

Shares

(Years)

$0.01

600,000

1.51

$0.15

1,200,000

1.54

$0.25

1,000,000

4.03

$0.375

200,000

1.81

$0.40

1,200,000

1.54

$0.50

3,000,000

0.33 – 4.03

$0.625

100,000

1.81

$0.75

1,250,000

1.92 – 4.03

$1.00

250,000

1.92

$2.00

200,000

3.90

9,000,000

At June 30, 2019, the Company’s closing
stock price was $0.09 per share. The Company had 600,000 warrants outstanding with exercise prices less than $0.09 with an intrinsic
value of $48,000 at June 30, 2019.

Shares Reserved:

At June 30, 2019, the Company has reserved
30,000,000 shares of common stock in connection with 2 convertible notes with detachable warrants and 3,500,000 shares of common
stock in connection with the court approved settlement agreement for a total of 33,500,000 reserved shares of common stock.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.